Saturday, October 24, 2009

On the first part of our series about forest-based carbon credits we talked about the potential of this model and presented the example of Carbon Canopy. Today we talk about the risks and the lessons we can learn fromthe Noel Kempff Climate Action Project (NKCAP) in Bolivia.

Noel Kempff is probably the most known project of forest offset scheme under REDD (Reduced Emissions from Deforestation and Degradation). On October 15, Greenpeace released a detailed report calling this project a "Forest Carbon Scam".

The project began more than a decade ago, in 1996, where a group of three energy companies (American Electric Power(AEP), BP-Amoco (BP), and Paciﬁcorp) and the Nature Conservancy and Fundación Amigos de la Naturaleza (FAN) joined forces with the Bolivian government in the first large-scale experiment to curb climate change with a strategy that promised to suit their competing interests: compensating for greenhouse gas emissions by preserving forests.

Together with the Bolivian government and three energy companies, the partners terminated logging rights in 4 areas just adjacent to a pre-existing national park and incorporated the land into the national park, creating the 3.9 million acre Noel Kempff Mercado National Park. The partners also initiated a comprehensive community development program to address the problem of small scale deforestation by local communities living just outside of the park.

There was also a financial aspect to the project: In return for millions of dollars of investment for the protection of an area of rainforest from logging for 30 years, they would be allocated the carbon offsets generated by keeping the trees standing. These offsets could then be bought and sold in carbon trading systems, in order to offset some of the CO2 pollution produced by these power companies.

So far, so good. But in reality, according to the report, the model just didn't work. Here are the main claims of Greenpeace (from their website):

Since the project started in 1997 the estimated CO2 emission reductions have plummeted by more than 90 per cent, from about 55 million tonnes to "up to" 5.8 million tonnes. Had the original false estimates been used on carbon markets there could have been an INCREASE in greenhouse gas emissions. Companies could have claimed non-existent emission reductions while continuing to emit the amount supposedly offset. These serious errors in counting emissions are reason enough to avoid sub-national offsetting altogther – but as if we didn't have proof enough, here's more. The project has failed to protect against:

1. “Leakage” — the companies promised that they were effectively monitoring leakagage but in percentage terms overall deforestation rates have actually increased in Bolivia. In fact, leakage from the project could be as high as 42-60 per cent.

2. ““Additionality” — Changes in Bolivian law mean that Noel Kempff may have been protected anyway, without company involvement, and therefore any C02 savings may not be additional.

3. "Permanence" – The project is at risk from forest fires, pests, disease and political changes, all of which can undermine forest protection. This could mean that the carbon stored, and used to offset the company emissions, could still be released.

4. "Community benefits" – Industry claims the project has benefited local communities in many ways, but testimonies we captured tell a different story. "Well, the reality is that the Noel Kempff project has not delivered any benefits," says local Pastor Solís Pérez.

Now, these are serious accusations, and of course they generate a big question mark on the real value of the carbon credits from the project. The Nature Conservancy, NKCAP's main broker and one of the world's largest conservation groups, strongly disputes this notion (and so is FAN, the other organization involved in the project).

As reported on the New York Times, the Nature Conservancy doesn't dispute some of the specific figures on the report, but their interpretation. For example, the estimation of the CO2 that the project will save, which was at first about 55 million tonnes and was reduced over the years to only 5.8 million tonnes. Now, Greenpeace sees it as an indication that it's difficult if not impossible to provide an accurate calculation of the savings. The Nature Conservancy on the other hand, sees these adjustments as an indication of how much the science and on-the-ground measurements have improved over the last decade and how serious efforts are to ensure legitimate credits.

There are some lessons from this case that can more easily implemented. For example, the question whether forest-based carbon offsets should come from individual projects. As reported on the NYT, practically everyone involved in the debate agrees that countrywide programs that measure deforestation against a national baseline are better because they eliminate carbon leakage within a country's own boundaries - a fact that the NKCAP experience effectively demonstrated.

There can be some exceptions (such the ones on the House-passed climate bill, relating to small countries and states in Brazil and Indonesia to submit individual project credits into the market), but this can definitely be the guiding rule.

But that of course won't help when it comes to issues such as the reliability of the calculations of the CO2 reductions. How do you make sure you're providing a figure that is meaningful and reliable? And is the risk in making false estimations too high and therefore we should not get into this forest-based carbon offsetting concept in the first place? These are though questions and we'll try to answer them on our third and last part of the series this Sunday.

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